Are There Hidden Costs Associated with Conducting Layoffs? The Impact of Reduction-in-Force and Layoff Notices on Teacher Effectiveness | JPAM Featured Article

Article Introduction

The Great Recession of 2008 led to widespread layoffs in both the public and private sectors. While there is a literature of empirical work that shows the direct costs of such employment reductions, including earnings losses of individual workers, increased unemployment benefits and lower savings rates, there is little work that examines the less obvious, but potentially quite important, consequences associated with layoffs and the process through which layoffs occur. In particular, the literature is relatively silent on whether and the ways in which employment instability associated with layoffs could affect individual employee productivity.

Public school teachers were heavily affected by recessionary layoffs during the Great Recession, and given the volatility of public education budgets, this population could again be at risk. Using data from the Los Angeles Unified School District and Washington State during the Great Recession, this article provides the first evidence about the impact of the layoff process on teacher productivity. In both sites the authors find that teachers impacted by the layoff process are less productive than those who do not face layoff-induced job threat. LAUSD teachers who are laid off and then rehired to return to the district are less productive in the two years following the layoff. Washington teachers who are given a reduction-in-force (RIF) notice and are then not laid off have reduced effectiveness in the year of the RIF. Through a series of ancillary analyses, the authors show that the negative impacts of the layoff process on teacher productivity are driven by the process’ effects on teachers’ job commitment.

Expore this, and other articles, online at Journal of Policy Analysis and Management (JPAM). APPAM invites authors from each issue to asnwer a few questions about their research to further promote the quality work in the highly-ranked research journal.

Author Interview with Katharine Strunk and Dan Goldhaber

What spurred your interest in this research about productivity declines after layoffs or under the threat of layoff, or about employment productivity in general?

This project comes on the heels of other research on the direct effects of teacher layoffs in Washington state (see https://www.mitpressjournals.org/doi/10.1162/EDFP_a_00111). But in discussing layoffs we began thinking about some of the indirect ways in which layoffs might impact schools. In particular, on the heels of the Great Recession, we were struck by the potential toll that the job insecurity connected to the layoff process could have on teachers, as well as the organizational challenges layoffs must cause for districts. The Vergara lawsuit was occurring around the same time, and it brought to the fore how the layoff processes required by state law in California and under most district collective bargaining agreements in Washington might be exacerbating the problem for both teachers and school and district leaders. Policymakers at the state and federal levels were discussing what, if any, reforms should be implemented to lessen any negative impact of layoffs, and particularly “last-in-first-out” (LIFO) layoff policies, on teachers and schools. There is very little empirical work out there about the effect of the overall layoff process on employee productivity, so we decided that it was time to generate some research that could inform conversations about how layoffs really do impact teachers’ abilities to do their jobs.

Based on your work in this paper, and perhaps others, why is the percentage of teachers who received RIF notices so much higher in the Los Angeles Unified School District (LAUSD) verses Washington State (13.3 percent verses 1.6 percent)? Likewise, of those teachers receiving notices, LAUSD also laid off a higher percentage than Washington. Is there a clear reason why?

The fact that this question distinguishes RIF notices from layoffs is really important! We speculate a bit here, but a likely reason that there were significantly more RIF notices in LAUSD than in Washington is that California law clearly lays out that teachers must be let go in reverse order of seniority, and they must be notified of the potential for layoff by mid-March, well before the state budget is finalized. As a result, LAUSD (and other California districts) had to provide notices of reductions in force to all teachers who may, under the worst case scenario, need to be laid off. Washington does not have the same type of state law (though some districts also require very early notification as part of their collective bargaining agreements).

As for the much smaller differential between the two sites in the percentages of teachers who were actually laid off, it is likely related to the fact that California was hit particularly hard by the Great Recession, and public services, and especially K-12 public education, bore the brunt of recessionary budget cuts. But it is also important to note that LAUSD hired back a far greater proportion of teachers than returned to their jobs in Washington state after layoffs.

When comparing teachers who returned to a public teaching position the following year, your research found that half of LAUSD teachers did not return to their district, while 63 percent of Washington’s teachers did not return to public teaching in the year following. Can you speak to this disparity? For example, are teachers in Washington more likely to take employment in a private school, while LAUSD teachers stay in the public districts?

As we mentioned earlier, this may be due to the legislative requirements in California. It seems likely that LAUSD had to lay off more teachers than did Washington districts given timing requirements, and then once budgets were finalized, LAUSD needed to offer employment back to laid off teachers in order to staff their classrooms. Having said that, the number of teachers in Washington that were actually laid off was quite small so we would not jump to strong conclusions about differences in the percentages of laid off teachers who returned to each site in the study.

Can you put the impact on student achievement in a broader context? At what point does the drop in teacher effectiveness due to RIF notices or layoff/rehires impact a student’s ability to succeed through grade levels? In other words, how can school districts, states – or even parents – understand these findings in terms of student success?

The effects are actually rather large. One of the basic facts we understand from decades of education research is that teachers grow better with experience, and this is especially the case in the first few years of a teacher’s career. Third or fourth year teachers tend to be substantially better than first year teachers.

We find that in both LAUSD and Washington, a child assigned to a teacher who was laid off last year and then is rehired and returns to the classroom this year (LAUSD) or who was RIFed and then not actually laid off this year (Washington) will, on average, perform at the level she might have had she had a first year teacher as opposed to a third or fourth year teacher.

What challenges, if any, did you find when conducting this research? How can further study overcome these challenges?

As we mention above, in California, the LIFO process is required by state law. While Washington school districts technically have discretion over how they execute layoffs, the great majority of Washington districts also use seniority to determine layoff order. This makes it difficult to assess the extent to which other non-seniority based forms of layoff might mitigate some of the issues we found in this paper and related work. For instance, because inexperienced teachers – in other words, those who will be laid off first – cluster in the lowest achieving schools and in schools with the highest proportions of traditionally disadvantaged students, it is likely that LIFO layoff processes hurt precisely the students who can least afford additional negative shocks. We hope that other researchers attempt to measure productivity effects of layoffs in systems that do not follow LIFO rules to help us tease out how much changing these kinds of regulations might or might not help diminish the negative impacts of layoffs.

How does this study impact or add to the existing research? What would be the ideal next step for your research findings? How would you like to see your findings implemented?

Given the way that public schools are funded, layoffs resulting from budget reductions – whether due to recessions or enrollment losses or some other reason – will remain an inevitable part of the K-12 public education landscape. It will be important to consider how to lessen the negative impact of the layoff process on teachers and students. One way districts might do this is by maintaining a “risk pool” – a pot of money that districts can use to draw down funds to avoid making cuts to personnel. States might also do more to tie the timing of RIFs and layoff notices to the state’s budget release. In fact, the California Legislative Analyst’s Office recommended doing this as far back as 2012.

About the Authors

Katharine O. Strunk, Ph.D., is the Clifford E. Erickson Distinguished Professor of Education Policy and, by courtesy, Economics at Michigan State University. She is also the faculty Co-Director of the Education Policy Innovation Collaborative (EPIC), housed at the Michigan State University College of Education. Her research is focused on education governance and reform, teacher labor markets and school and district accountability and support policies.

Dan Goldhaber is the Director of the Center for Education Data & Research and a Professor in Interdisciplinary Arts and Sciences at the University of Washington Bothell. He is also the Director of the National Center for Analysis of Longitudinal Data in Education Research (CALDER) and a Vice-President at American Institutes of Research (AIR). Dan's work focuses on issues of educational productivity and reform at the K-12 level, the broad array of human capital policies that influence the composition, distribution, and quality of teachers in the workforce, and connections between students' K-12 experiences and postsecondary outcomes.

David S. Knight is the Associate Director of the Center for Education Research and Policy Studies (CERPS) and Assistant Professor in the Educational Leadership and Foundations Department at the University of Texas at El Paso. His research focuses on equity in the allocation of educational resources, school finance, cost-effectiveness analysis, and educator labor markets. He received his PhD in urban education policy and MA in economics from the University of Southern California and bachelor’s degrees in economics and anthropology from the University of Kansas.

Nate Brown is a Research Manager at the Center for Education Data & Research. Nate entered education research following several years of experience as a case manager in a community mental health and public health setting. Nate holds a BS in Neuroscience from Washington State University and an MA in Policy Studies from the University of Washington, Bothell. Nate is currently working on projects related to the teacher labor market, teacher licensure, and international comparative education.

Submit Your Research to JPAM

JPAM seeks contributions that span a broad range of policy analysis and management topics with an emphasis on research that conveys methodologically sophisticated findings to policy analysts and other experts in the field. Both domestic and international contributions in public management are welcome, as well as a broad range of policies related to social well-being, health, education, science, environment, and public finance. JPAM strives for quality, relevance, and originality. An interdisciplinary perspective is welcome as are articles that employ the tools of a single discipline.